Price of Gold Fundamental Daily Forecast- Friendly NFP Report Could Trigger Plunge Through $1268.90

Gold prices fell to a new low for the week on Thursday in reaction to a stronger U.S. Dollar which rose against a basket of currencies after another day of better-than-expected economic data. Losses were limited by position-squaring and general worries ahead of Friday’s U.S. Non-Farm Payrolls report. Other data showed that investors were pricing in an 83 percent chance of a December rate hike by the U.S. central bank.

December Comex Gold settled at $1273.20, down $3.60 or -0.28%.

Another day of record highs in the U.S. stock market also weighed on gold prices because this was a strong sign that investors are more comfortable buying risky assets than putting money in the lower-yielding and safe-haven gold market.

Investors also seemed to be more comfortable with President Trump’s list of potential candidates for the Fed Chair position. On Wednesday, outgoing Vice-Chairman Stanley Fischer said that any new head of the Fed will need to have the “flexibility of mind” to change tack during acute periods of crisis.

Forecast

The fundamentals are bearish but investors appear to be respecting the technical chart pattern on the daily chart. It shows key support is $1268.90. Prices could plunge sharply lower if this level is taken out with conviction and increasing volume.

Besides concerns over Friday’s U.S. Non-Farm Payrolls report and its impact on Fed policy, gold investors are feeling the effects of the Chinese holiday this week. Volume is low and buyers are scarce so we could see an exaggerated move to the downside if the jobs report is bearish. The same goes for a bullish report. If this occurs, we could see a short-covering rally and buyers could overplay the upside.

It all adds up to a possible two-sided trade accompanied by increased volatility.

The Non-Farm Employment Change is expected to show the economy added 82,000 jobs in September. The number is expected to be low due to the impact of hurricanes Harvey and Irma.

Average Hourly Earnings are expected to come in at 0.3%. The Fed pays close attention to this part of the report so a stronger number will increase support for a December rate hike. A lower number will raise some issues, but shouldn’t derail the Fed’s plans.

The unemployment rate is expected to come in unchanged at 4.4%.

In addition to the NFP report, traders will have a chance to react to comments from FOMC Member William Dudley and FOMC Member Robert Kaplan.